Interim authority invites bids for three mobile licences

• Companies given until mid-August to express an interest
• Two-year concessions will divide the country into three geographical areas
• Arguments begin over whether the systems should be based on GSM or CDMA technology

Iraq’s US-led interim ruling body yesterday announced plans to launch a tender for three mobile telephone licences by the end of the month. The Coalition Provisional Authority (CPA) said it would issue a request for interested companies to begin submitting their business proposals in the week starting 28 July, with the closing date for bids set at two weeks later. The CPA is planning to award one concession each for northern, central and southern Iraq, but has yet to give any details on the contentious issue of which technology it plans to adopt to build the networks. Whilst the installation of GSM equipment would allow users to interconnect with numerous other networks in the Middle East region, US Defence Secretary Donald Rumsfeld has come under pressure at home from politicians urging him to ensure the adoption of the CDMA technology developed by US company Qualcomm. Another controversy centres on the duration of the licences, which at two years has led to complaints that the potential new operators would struggle to recover the investment needed to build the infrastructure in the first place.

As highlighted in CIT’s new report, The Yearbook of Middle Eastern Telecommunications 2003, Iraq is one of the few nations in the world without a commercial wireless network in its capital city. The only operational mobile system is in the city of Al-Sulaymaniyah in the northern Kurdish region, which is owned by Kurdish separatists. There have been several unsuccessful attempts to build other networks, most notably in the late 1990s when Saddam Hussein’s government awarded Chinese equipment manufacturer Huawei Technologies a USD28 million contract to build a 25,000-line GSM network in Baghdad. The terms of the agreement covered the construction of 60 base stations over a 50km radius. However, progress was delayed for several years due to UN sanctions imposed on Iraq in the wake of the 1991 Gulf War and the first delivery, consisting of a mobile exchange, was not received until August 2001. The following month Huawei Technologies pulled out of the venture to avoid violating UN sanctions related to conducting business with Iraq.

The March/April 2003 war in Iraq once again brought the lack of mobile services in the country to the world’s attention. While the conflict was still raging, speculation began as to who would be charged with rebuilding and expanding Iraq’s shattered and hopelessly inadequate communications systems - a potentially lucrative task. It was at this point that the GSM versus CDMA debate surfaced, when US congressman Darrell Issa sent an open letter to Defenee Secretary Donald Rumsfeld warning that US jobs and profits would be jeopardised if European GSM technology was deployed in post-war Iraq. The GSM Association was quick to condemn the congressman for the inappropriate timing of his comments, and countered his arguments by stating that GSM was not purely a European technology but a global standard used by almost a billion users. In addition, the Association pointed out that had it not been for the UN sanctions GSM would have already been installed in Iraq as it had been the technology of choice of the old administration. Furthermore, GSM is predominant in the Arab world and selecting CDMA would only magnify Iraq’s isolation, something which would run contrary to the stated aim of the war. Industry watchers have pointed out that it is probably no coincidence that the congressman hails from California, which is also the home of Qualcomm..

Predictions that US firms would stand a far greater chance of receiving lucrative telecommunications contracts in the wake of the war became reality in May 2003 when bankrupt US telco MCI (formerly WorldCom) was granted the right to build an emergency GSM mobile network in Baghdad. The inadequacy of the country’s PSTN, which was in any case badly damaged by the conflict, meant that the coalition forces attempting to reestablish law and order in the country as well as those seeking to provide humanitarian aid, had little or no means of effective communication. The decision to award MCI a contract, valued at between USD30 million and USD45 million, sparked both controversy and surprise around the world. Predictably, there was outcry among non-US companies, whose fears of favouritism of American firms had apparently been realised. In addition, concerns were expressed as to whether MCI was an appropriate choice. Fresh from its highly publicised accounting scandal, the disgraced company has no experience of operating a cellular network and has even exited the reseller business in its home market. In its defence, MCI pointed out that it carried out the same role Afghanistan immediately after the end of the conflict in 2001 and has successfully completed a number of similar projects for the US government elsewhere. The Afghan network, which has capacity for just 10,000 subscribers, was rolled out quickly and is believed to have begun operations in mid-June.